"How Can We
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By Troy St. John Fidelity National Title |
There are two questions I am asked by buyers and sellers.
This is one of the two most common questions
I am asked by buyers and sellers:
Escrow is a transaction where one person delivers something of value to a third person, to be held until the happening of a specified event or condition, upon which it is delivered by the third person to another. Both parties to a real estate transaction entrust legal documents and various funds to the escrow holder, which transfers the papers and funds upon closing of the escrow. As a neutral third party, both buyer and seller are assured that all mutually agreed to terms are met before the transaction is completed.
Using the escrow holder as a common depository, the buyer and seller can proceed simultaneously in providing funds, deeds, inspection reports, insurance information, and other required documents. Both parties give written instructions, the requirements of which must be met before the transaction is complete, to an experienced escrow officer. Lenders also specify their conditions for completing the loan process. Provided that the instructions are clear and mutually consistent, the escrow officer, as a limited agent for all parties, saves time in the closing process.
The authority given to an escrow holder is strictly limited by instructions provided by the buyer and seller. The escrow officer is authorized by instructions to allocate funds for the items during the escrow period, such as real estate commissions, title insurance, liens, recording fees, and other closing costs. Instructions also specify the method of collecting funds, proration of insurance and taxes, and time limitations on settling transactions. The escrow process protects all parties involved by retaining money and documents until the mutual instructions are met.
Confidentiality is another important aspect of escrow. To effectively handle a transaction, your escrow officer must be instructed as to the required terms necessary to close. The officer will discuss escrow matters only with the parties directly involved, specifically the buyer, seller, lender, and real estate agent. No one else has access to this information, except through proper legal procedures. The escrow officer retains impartiality and confidentiality concerning the real estate process. Upon closing, the escrow holder causes the required documents to be recorded and disburses funds according to the instructions given to the escrow officer. Escrow fees are included in these costs, and are based on the sale price of the property, the loan amount, and services required.
THE BUYER
- Deposit funds to pay for the purchase price, and funds for property and closing costs.
- Provide deed of trust or mortgages needed to secure the loan
- Arranges for borrowed funds to be deposited in escrow.
- Provides, if required, documents such as inspection reports, insurance policies, and lien information to verify compliance to the instructions
- Deposits the deed to the buyer with the escrow holder.
- Provides evidence to meet the buyer's condition of sale, such as proof of repair work and inspections.
- Submits other documents, such as tax receipts, mortgage information, insurance policies, and warranties.
Deposits loan funds, lender instructions and other loan documents with the escrow holder.
THE ESCROW HOLDER- Serves as a central depository for funds and documents
- Obtains a title insurance policy, when required
- Fulfills the lender's requirements if applicable
- Secures approval from the buyer on requested documents
- Prorates insurance, taxes, and rents, as instructed.
- Fulfills buyer and seller instructions
- Allocates funds for closing costs, and verifies that required funds from each party are deposited into escrow.
- Once all conditions are met, the escrow holder causes the necessary documents to be recorded. Executed loan documents are forwarded to the lender.
What is Title & Title Insurance
Want To Know More? Contact Troy Troy St. John is Vice President of the Hawaii Division of |
Thank You
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James Patton Toll Free (800) 997-8701 Ilikai
Marina Bldg, #1389, |
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